There are lots of things we could talk about one year later, but for this post we’d like to focus on the suit filed today by BP against Transocean, the rig’s owners, and Cameron International, the supplier of the  blow-out preventer, for $40 billion.  From AP (article), guardian.co.uk,  ”The Deepwater Horizon BOP was unreasonably dangerous, and has caused and continues to cause harm, loss, injuries, and damages to BP (and others) stemming from the blowout of Macondo well, the resulting explosion and fire onboard the Deepwater Horizon, the efforts to regain control of the Macondo well, and the oil spill that ensued before control of the Macondo well could be regained,” BP said in the lawsuit against Cameron.  BP is also suing Halliburton, the company responsible for pouring the cement.

The reason we are focusing on this aspect is because, when we look at the benefits of Green Project Management, we see that green thinking should be a part of all the project’s processes, including the procurement process (just one of the processes outlined in our book).  In this case, if the questions were not asked, we would have asked about the greenality of BP’s “vendors”.  There would have been questions like:  What did Transocean consider for their environmental impact?  What safe guards were in place in case of an issue like a spill or blowout preventer failure?  Were those scenarios even considered?  Driving back into their processes, we could have asked to see the invitation to bid, to examine whether Transocean considered the greenality of their vendors.  This is just a sampling of questions to ask.  On a project this large like this, with the potential for devastation it has, the questioning would have been extensive and rigorous.

We advocate a “greenality clauses”.  We believe that if we choose a company, considering their green efforts as part of the decision making process, that they should be held accountable for those green efforts, as well as capturing that criteria in the contract.   Again, we like to give the obligatory caveat that we were not in the room when the decision was made by BP to go ahead and lease the rig from Transocean, so we don’t know exactly what went on.  But from our point of view, the project did not consider all of the green aspects it should have and that green project management would have helped in that process.

When you think is it safe to go back in the water, the sharks show up.  The cost of greenality keeps going up for the principles involved in the Gulf Oil Spill.  The Department of Justice announced today that it would join in the civil suit being filed against such companies as BP, Anadarko, and Transocean.  Adding the cost of the spill paid out so far, the losses of life, and the $20 billion fund, what will the final price tag be?  We’re not saying that the tragedy could have been avoided, or the damage could have been minimized if the companies involved had paid more attention to the project’s environmental risks  involved with the Deep Water Horizon.  But then again, why take the risks without fully investigating ALL project risks, especially with the potential environmental damage that could occur.  Again, we were not in the room when these decisions were made (perhaps we should have been and then we’d know), but it makes sense to us that if all of the risks were not considered, it certainly would have been cheaper, by orders of magnitude, to cover all the bases.   That’s what we think.  For more information on managing projects with greenality, see our book.

We’ve blogged about the Deepwater Horizon oil spill which seems to have found its way OUT of the news recently.

There is some interesting coverage of the Commission which is investigating what happened to cause the spill and which could be particularly interesting to Project Managers from a risk identification, management, response, and monitoring perspective.  I know,  I know…we used the words C-SPAN and interesting in the same sentence... but you may find the use of various speakers, animated slides and video does indeed make this a bit more interesting.  One speaker even uses a very insightful analogy involving margaritas in a blender.

There is a blow-by-blow description of what happened when, as well as some good background on the science of the drilling business.

Enjoy…  click here to watch.

Note: you should go to this site to get all of the coverage.  The link above is for this morning’s testimony.

We want you to start here by watching the video below:

Now you may not have the same political views of the commentator, but you have to admit that the Ixtoc spill and its solutions sound strikingly familiar.

Aligned with this video is this story from today’s Boston Globe.

It’s a short story but here are some telling statistics from (this year’s) Gulf oil spill:

• Oil spilled so far: 69 million to 131.5 million gallons

• Oil recovered: 10 million gallons burned off, 25 million gallons collected
• Tools used to collect oil in the 2010 Gulf spill:  booms, mechanical skimmers, and oil dispersants.
• Tools used to collect oil in 1979 Ixtoc spill: oil booms, mechanical skimmers, and oil dispersants.
• Tools used to collect oil in 1989 Valdez spill: oil booms, mechanical skimmers, and oil dispersants.

• Investment in past three years in drilling by Shell Oil, ExxonMobil, ConocoPhillips, Chevron Corp., BP America:  $33.8 Billion
• Investment in past three years in cleanup technologies: unknown, but a tiny fraction of the above

The point of the article, and of Rachel Maddow’s rant above is just really a project management principle:  use your lessons learned.  There have been several chances to do that, as you see above.  And you can’t blame the oil industry for trying to focus mainly on the profitable business of drilling.  But when you look at the costs they’ve incurred, you have to shake your head and ask why, with these many real-world lessons learned they wouldn’t have devoted more effort to learning from the other spills and investing in fixing them.  Yes, it’s expensive to drill a relief well with each well but it sure looks like that’s the way to go.

As project managers, we owe it to ourselves, our stakeholders, and sometimes the wider environment (pun intended) when we initiate a project.

Have we really looked back – thoughtfully – at previous similar projects, and what went horribly wrong or tremendously right with them?  Have we taken that learning and integrated it into our planning? If that integration requires speaking “truth to power”, have we the courage to do that?  We assert that having the facts and the history in hand increases your capability to have the courage to confront, convey, and convince. Those facts are there.  The video above is striking in the similarity to today’s Gulf problems.  I would have liked to have seen that video played during the recent Congressional panels on the oil spill, and would like to have seen Tony Hayward’s reaction.

Again, you don’t have to agree with the politics or even the particular scenario we’ve chosen to illustrate the point.  If you get the part we’ve bolded above, you get the “project management point of intersection” here.

“A Workaround is a solution to an unanticipated problem. Not to be confused with a contingency, or backup plan, which is conceived in advance, a workaround is a far less elegant solution to the problem. Typically, a workaround is not viewed as something that is designed to be a panacea, or cure-all, but rather as a crude solution to the immediate problem.”

The above is taken from an excellent resource for PMs – a blog called Project Management Knowledge.  They have a glossary and this is the definition of workaround.  We like it.  That is, we like both the site and their definition of ‘workaround’.

At the time of this posting, the Ron Howard movie Apollo 13, starring Tom Hanks, Kevin Bacon, Gary Sinise, and Ed Harris, is showing on Home Box Office (HBO).  Also at the time of this writing, the Gulf oil spill continues and repeated attempts to fix it have failed.  Attempts with names like Top Hat, Junk Shot, Top Kill, and the latest, Slice and Cap, are a strong giveaway that what we’re working with here are, in fact, clearly workarounds.  In fact, we understand that James Cameron has been invited to help solve the problem, based on his work with advanced underwater robotics from his film The Abyss.

The reference to crude, the fact that the new mission of Apollo 13 was to get the astronauts back to Earth, and this being a blog called EarthPM combined with the crude that is pouring into the Gulf and the workaround(s) being attempted to fix that problem seemed to me to have way much too much ‘karma’ to not generate a post – a valuable one, we hope.  Oh, wait, there is the other connection of movies to the Gulf with the James Cameron invitation.  Wow, that is a lot of karma!

I suggest you start by watching this scene from the movie.

OK, if you have seen the movie, that was a good refresher, right?  And if not, suffice it to say that at this point, NASA is furiously searching for a way to save the lives of the astronauts, having scrapped the original objective the moon landing project long ago – just as BP is furiously searching for a way to stop the leak, the lawsuits, the damage to the environment, and to minimize the reputation damage they’ve suffered, to say nothing of avoiding criminal charges, having scrapped the original objective of the well (drawing oil from it to make money).

So let’s bring this back to Project Management again.

When we manage a project, we do a thorough job of Risk Management Planning, including the creation of  a Risk Management Plan – to tell us how, in general, we’ll deal with risk on the project.  This includes the ways in which we’ll identify risk, and general broad brush plans for contingency management.   Up front, in the project, we go through Risk Identification, Analysis (both qualitative, to see which ones have the highest risk factors, and quantitative, to further analyze those with the highest risk factors).  Only after we really have a handle on the project’s risks do we go through the details of responding to risk.

Furthermore, even after all this is done, we don’t stop.  We monitor and control risks to see, for example, if new risks have popped up, or if our current assumptions are still valid, or if the risk response plans we’ve put in place are working.

So, all that said, what if our risk response doesn’t work?

That’s where the word contingency comes in.  Contingency is money, time, or resources (like a life-saving flotation device) set aside to minimize the impact of the risk that is now triggered.  These are thought of in advance.  In the Apollo 13 dialogue, you hear the engineers actually use this phrase (“we didn’t have a contingency for this”).

On a cruise ship, a fleet of lifeboats on a cruise ship is part of their contingency planning. If contingency is a house pet, a workaround is a very different animal.  A workaround, unlike a contingency, is not fed with foresight, softly petted with preparation, not pampered with planning .  Instead, a workaround is like having a wild boar, or even more descriptively, a griffin suddenly appear in your living room, hungry, flailing, snorting, and growling.  It’s unexpected, and you must deal with it NOW.  And it’s really the dealing with the griffin that is the workaround, not the griffin itself, although the imagery was just too good to avoid.

That’s what BP and Transocean and Haliburton and Cameron International (manufacturer of the Blowout Preventer) are facing now.  That’s why they’re calling in movie directors and engineers, and 25,000 workers to put together Top Hats, Junk Shots, Top Kills, and Slice and Caps.  There was less of a contingency than there should have been to deal with the impact.  Once again (and we’ve blogged about this), why wouldn’t the oil industry as whole (if not BP in particular) have had a fleet of the Kevin Costner -funded boats ready to clean up the spill to at least buy a little time?  That’s a form of contingency that would have kept the griffins at bay.

Now BP has said that it had a contingency plan, and it’s working – incredibly, they did actually say that, just a few days ago.  Read that story here.

Let’s wrap this unusual posting in the following way:

It’s worth it to put the time in up front in a project so that you really understand the risk factors (the probability multiplied by the FULL impact) of all of your risks, and it makes sense to put the time in up front on contingency planning on those risks.

In our book we talk about the Cost of Greenality.

Like the Cost of Quality, with which Project Managers should be familiar, it speaks to the idea that money spent up front to prevent problems and to be sure to meet stakeholder requirements will outweigh the savings in the medium and long run.  Below is a chart that actually we were lucky enough to present today at PMI MassBay’s Professional Development Day in Waltham, Massachusetts.

BP and TransOcean are now seeing this first hand.

We’ll have much more on the Horizon Deepwater spill, but for now, have a look at these two videos from Fox News.

Environmental effects of the spill – video from Fox.

Cost of Greenality

Cost of External Failure – angry fishermen sue BP – from Fox.

Do you think BP may have been better off investing in the technology which could have prevented this incident, or are they better off dealing with the external (VERY external) failure that they’re experiencing now?  And in this case, it’s not just BP, nor TransOcean.  It’s the entire Gulf region, already hit hard by Katrina, and this may now start to affect people along the rest of the Atlantic and elsewhere.

Consider the Cost of Greenality.

UPDATE 4-MAY-2010

We’re now beginning to see numbers associated with the Cost of Greenality for this event – in the high single to double digits, in BILLIONS of dollars, and $34 BILLION in stock value losses, not to speak of the horrific reputation setback and lawsuits BP faces.